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Singapore International Arbitration Centre and courts can appoint tribunal despite 'bare' arbitration clause

ANALYSIS: Singapore's International Arbitration Centre (SIAC) and courts can appoint an arbitral tribunal even when faced with a 'bare' arbitration clause which does not specify that the arbitration will take place in Singapore, according to a recent decision from the Singapore High Court.10 Mar 2017

The dispute centres on money that Asian Mineral Resources allegedly owes to KVC Rice Intertrade and Tanasan Rice under contracts to purchase rice. Asia Mineral Resources had refused to cooperate in appointing an arbitral tribunal, leading the claimant rice companies, KVC Rice Intertrade and Tanasan Rice, to abandon arbitration and bring their claims by court proceedings instead.

However, Asian Mineral Resources then applied to the Singapore High Court to stay the litigation in favour of arbitration, given the presence of the arbitration clause, and the stay was granted. KVC Rice Interchange and Tanasan Rice then appealed against that stay.

It was initially unclear whether SIAC and the Singapore courts could step in given the 'bare' arbitration clause. It was also suggested that the arbitration clause was inoperable and should be considered null and void.

However, in a move that reflects the Singapore courts’ reputation for upholding the primacy of arbitration where there is an arbitration clause, the High Court made a novel decision to break the deadlock by finding that the court proceedings should remain stayed, the arbitration clause was not null and void, and if the rice companies wanted to pursue their claims by way of arbitration, the president of SIAC should have the power to appoint a tribunal if the parties cannot reach agreement on that appointment.

The Court found that although the power conferred by the Singapore International Arbitration Act on the SIAC president may only be exercised where Singapore is the place of arbitration, it does not necessarily follow that the president is powerless to assist in cases where the place of arbitration is unclear. The president is entitled to seek more information and to examine the underlying contract for connecting factors pointing to one jurisdiction or another in such cases.

The Court also noted that the standard of review to be applied by an appointing authority when determining whether it has jurisdiction to make an appointment would be much lower than the standard adopted by a tribunal when determining its own jurisdiction. SIAC would only need to be satisfied that there is a prima facie case it has such jurisdiction because, among other things, an appointing authority is only performing an administrative function.

Judicial commissioner Chau commented in his decision that there appear to be no obstacles in the way of the SIAC president appointing a tribunal in this case, in the event that the parties cannot reach agreement on that appointment. He also noted that if the president were to decline to act then, as a last resort, the court would retain a residual jurisdiction to appoint a tribunal if the parties cannot agree on that appointment, so as to ensure that the parties' intention to have their dispute settled by arbitration is not defeated.

Singapore-based Sean Hardy is an arbitration expert with Pinsent Masons, the law firm behind Out-Law.com